The country’s top electric vehicle (EV) player, M&M, has posted a record loss of Rs 1.29 billion in its electric mobility business, on a turnover of Rs 1.29 billion during FY18, a year marked by the government’s thrust on EVs and multiple announcements by industry players.

The tractor-to-SUV maker managed a four-fold growth in volumes to sell over 4,000 EVs last year but losses also expanded.

The losses are clocked by M&M's subsidiary Mahindra Electric Mobility Limited. M&M had acquired electric carmaker Reva in FY11 for Rs 1.59 billion and renamed it as Mahindra Electric Mobility. M&M has invested Rs 6 billion in electric vehicles business so far, and is putting another Rs 9 billion over the next three-four years in technology and products.

However, making money has been a challenge for the EV division. Losses of the EV business have been rising year after year. Cumulatively, the firm's EV business has incurred a loss of Rs 5.92 billion since FY11, data collated from the past annual reports show.

Mahindra, along with its subsidiary Mahindra Electric Mobility, sold 4,026 EVs (1,094 four-wheelers and 2,932 three-wheelers) during FY18 as against 1,021 EVs in the previous year, the company’s latest annual report said.

“This growth is supported by the government's thrust on adopting EVs and your company's efforts of working with various stakeholders, especially fleet operators," it said. It struck a partnership with mobility service providers like Ola and won orders from Energy Efficiency Services Limited last year.

The company did not respond to queries on losses in the EV business citing a silent period. “We don't aim to see profitability (in EV business) but at least volume must be there. The year 2018 has to become a year of EV action. If 2018 does not see traction in EVs then all the interest will die. Nobody is going to keep pumping in money if volume does not pick up,” Pawan Goenka, managing director at M&M had told Business Standard in February.

If one takes a simple average and spreads the loss of Rs 1.29 billion over 4,026 vehicles that were sold, the loss on per unit comes to over Rs 320,000. The per unit loss on three-wheelers, which forms the bulk of the sales, will obviously be lower than the average. Buyers of electric vehicles also got a subsidy from the government in FY18. However, the challenge for Indian manufacturers is the high reliance on imported components, especially batteries.

The losses show that electric mobility will remain a loss-making proposition for the automakers at least in the near future. This also explains why a large number of players — Hyundai, Honda Cars, Hero MotoCorp and Honda Motorcycle & Scooter — have not yet announced any investment in the EV space.

The GST (goods and services tax) Council last year announced a tax of 12 per cent on all electric vehicles compared to a minimum 28 per cent tax on conventional fuel vehicles.

On Saturday, the Council decided to cut tax on lithium-ion battery to 18 per cent from 28 per cent.

The government, in FY18, had harped on a full transition to electric mobility by 2030.

However, the industry talks of a 30 per cent coverage by 2030 and a full transition by 2047. Among the big industry moves, Suzuki last November announced that it would manufacture electric cars in India along with Toyota, by 2020.